Block on Trump's Asylum Ban Upheld by Supreme Court
The Great Recession might be over, but the litigation is just beginning.
In what's likely to be a string of market meltdown cases, all tracing back to the infamous mortgage-backed securities which crippled the U.S. economy in 2008, the Second Circuit breathed new life into a Barclays case, reports Reuters.
Plaintiffs, Barclays shareholders who purchased shares at $25 each in four different offerings, brought suit against Barclays under §§ 11, 12(a)(2), and 15 of the Securities Act of 1933, when their shares were devalued to between five and seven dollars.
The district court dismissed all of the plaintiffs' claims, stating that they were time barred and inadequately pled. The Second Circuit agreed that allegations stemming from three of the four offerings were time-barred, but disagreed as to the fourth offering.
The Securities Act claims that plaintiff brought had to do with misleading or untrue statements of material facts or omissions. Here, the district court stated that "claims of disbelief of subjective opinions must necessarily be brought as fraud claims." However, after the district court's opinion, the Second Circuit decided Fait v. Regions Fin. Corp. which held that for purposes of claims brought under the §§ 11 and 12 of the Securities Act, defendants may be liable "for misstatements of belief and opinion, 'to the extent that the [belief or opinion] was both objectively false and disbelieved by the defendant at the time it was expressed.'"
Because of the broader interpretation in Fait, the Second Circuit held that the district court should have allowed plaintiffs to amend their pleadings. Correcting the pleadings would have resolved any issues about inadequate pleadings and standing.
With the onslaught of cases where banks are accused of wrongdoing, this case is significant. In clarifying the standards for bringing claims under the Securities Act, you can be sure to see many amended pleadings at the trial level. The ripples of this case will be felt here, and no doubtedly, across the pond.